Eland Oil & Gas PLC Operations Update for the OML 40 licence, located onshore Nigeria
Eland Oil & Gas PLC (AIM: ELA), an oil & gas development and exploration company operating in West Africa with an initial focus on Nigeria, announces the following update on activities for the OML 40 licence, located onshore Nigeria (“OML 40″).
The Opuama Production Facility was shut down in March 2006 and consequently there has been some deterioration of infrastructure. Eland have worked closely with the Operator (NPDC) to re-start the production in a challenging operating environment. This joint approach has ensured that the complex issues have been addressed collectively and resolved to provide the best opportunity for an early restart of production on the facility which has been shut in for 7 years. Operational activities in 2013 have therefore been initially focused on replacement of the corroded infield flowlines, refurbishment of the production flowstation and the repair of the oil export pipeline including the replacement of all corroded and damaged sections.
· The work of fabrication and installation has been completed to fully replace the 3 flowlines on the planned existing start-up wells in the Opuama Field. These flowlines have been trenched and overlaid with protective concrete mats at major water crossings. A cathodic protection system has also been installed.
· The 8″ and 10″ sections of the export pipeline have been surveyed and repaired (first 12km of 36km). This section of the line is currently being flushed prior to conducting a full pressure test to verify its integrity. The repairs to the final 24km-long 12” section to Otumara (custody transfer point) are on-going and expected to complete within the next 3-4 weeks.
· The Opuama Flowstation Rehabilitation work is currently underway with purchasing of the major components ongoing and site activities starting. The work program is expected to have a 3-5 week duration.
· With these final works expected to complete over the coming weeks, management is confident that production will commence before year end. While this is a deferment from the previously prognosed October, comfort can be drawn from the fact that work on all components is underway and is being vigorously monitored for ways of improvement.
· Drilling of the initial six development wells within the Opuama Field (Gross Certified 2P Reserves of 54.2 Million bbls) is planned to commence upon the release of the Depthwize Imperial swamp rig currently on a single well assignment with Conoil on OPL 2007. The latest information from the current operator indicates that the Rig should be released from location in early 2014.
· Year-end exit production rate is anticipated to be in excess of 2,500 bopd from the planned restart of the two existing wells in the Opuama Field. It is then anticipated that production will increase by circa 3,000 bopd for each subsequent new well drilled during 2014. These wells will be hooked up to the production facility as they are drilled.
· The agreed debt facilities with Standard Chartered Bank remain available following first oil and the Company currently has sufficient cash to meet first oil requirements.
Les Blair, CEO of Eland Oil & Gas, commented:
“Our immediate focus is to restore oil production on OML 40 and we have a close working relationship with the Operator, NPDC, to achieve this goal. In parallel we continue planning for the extensive development drilling campaign on OML 40, starting with six wells on the Opuama Field.
The delays we have experienced are frustrating but not unexpected in a project of this complexity and in the environment in which we are operating. The management of Eland have significant experience of working in Nigeria and have established excellent working relationships with NPDC and all of our stakeholders in the license area. This will stand the Company in good stead to unlock the value inherent in OML 40, which will be amply demonstrated when the drilling campaign gets underway.”
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